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Garment exporter Bangladesh faces $6 bln hit as world retailers cancel orders

Reuters | Dhaka | Updated: 01-04-2020 03:28 IST | Created: 01-04-2020 03:22 IST
Garment exporter Bangladesh faces $6 bln hit as world retailers cancel orders
Representative Image Image Credit: Pixabay

Bangladesh, the second-largest apparel producer after China, is set to lose roughly $6 billion in export revenue this financial year amid cancellations from some of the world's largest brands and retailers, two major industry bodies said on Tuesday. The two groups, which represent the vast majority of the readymade garment and knitwear manufacturers in the country, said cancellations were increasing daily amid coronavirus-driven lockdowns globally, and these risked jeopardizing millions of jobs in the poor South Asian nation.

Low wages have helped Bangladesh build its garment industry, with some 4,000 factories employing 4 million workers. Garment exports accounted for $34.12 billion, or 84% of the country's overall exports of $40.53 billion, in the fiscal year ended June 30, 2019.

"We've lost more than $3 billion due to the crisis. All our orders until July have been cancelled or suspended," Mohammad Hatem, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said. "Suspended orders will eventually get cancelled. All these orders were placed for summer and it takes three months to get these delivered. If they are not taking supplies now they will not take it when the summer is over," said Hatem, adding buyers had adopted a wait and watch policy, and are refraining from placing new orders.

"Many factories will be closed if this persists," he added. One industry source, who asked not to be named as the order books are confidential, said Gap, Zara, and Primark were among the brands that had cancelled orders.

Gap and Zara did not immediately respond to emails seeking comment. Primark confirmed the step. All Primark stores across the world are closed and the brand has been losing sales of $807.82 million a month, Primark said in a statement.

"We have large quantities of existing stock in our stores, our depots and in transit, that is paid for", the statement said. "If we had not taken this action, we would be taking delivery of stock that we simply could not sell". Readymade garment makers face a similar hit, warned Rubana Huq, the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Huq said some 1,048 factories that were part of BGMEA had reported that orders for over 900 million garments worth $2.9 billion had already been cancelled or were being held up. Huq said the order cancellations could affect some 2 million workers in the readymade garments segment.

Prime Minister Sheikh Hasina recently unveiled a $588 million package for the country's crucial export sector, asking companies to put the money towards paying workers. "This is not enough. The government should come up with more stimulus to save the country's biggest export sector," said Rezwan Selim, a director of BGMEA.

Siddiqur Rahman, a top exporter who supplies H&M, and Walmart among others, said the situation was dire. "We're facing an unprecedented time," he said. "No one knows how long this is going to take. We're trying hard not to shut down our factories. But how long can we hold out?" ($1 = 0.8046 pounds)


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